Wilmington Trust is a registered service mark used in connection with various fiduciary and non-fiduciary services offered by certain subsidiaries of M&T Bank Corporation including, but not limited to, Manufacturers & Traders Trust Company (M&T Bank), Wilmington Trust Company (WTC) operating in Delaware only, Wilmington Trust, N.A. (WTNA), Wilmington Trust Investment Advisors, Inc. (WTIA), Wilmington Funds Management Corporation (WFMC), Wilmington Trust Asset Management, LLC (WTAM), and Wilmington Trust Investment Management, LLC (WTIM). Such services include trustee, custodial, agency, investment management, and other services. International corporate and institutional services are offered through M&T Bank Corporation’s international subsidiaries. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank. Member, FDIC.

M&T Bank Corporation’s European subsidiaries (Wilmington Trust (UK) Limited, Wilmington Trust (London) Limited, Wilmington Trust SP Services (London) Limited, Wilmington Trust SP Services (Dublin) Limited, Wilmington Trust SP Services (Frankfurt) GmbH and Wilmington Trust SAS) provide international corporate and institutional services.

WTIA, WFMC, WTAM, and WTIM are investment advisors registered with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply any level of skill or training. Additional Information about WTIA, WFMC, WTAM, and WTIM is also available on the SEC's website at adviserinfo.sec.gov.

Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services.

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Investment and Insurance Products • Are NOT Deposits • Are NOT FDIC Insured • Are NOT Insured By Any Federal Government Agency • Have NO Bank Guarantee • May Go Down In Value

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Investment Management

Buckled Up in the Driver’s Seat

Tony Roth
Chief Investment Officer

November 2, 2021

Tags

I’m (thankfully) finding myself on the road much more these days, visiting clients, colleagues, and family, and am struck by how similar investing is to being behind the wheel of a car. Like driving, investing requires a careful consideration of many visible and invisible risks, looking both ahead and behind us when interpreting economic data, and avoiding hard turns of the wheel unless necessary. It is the case today that we are traveling down a winding road and have better visibility of our destination nine to twelve months ahead of us, but not necessarily clarity on how we will get there. Elevated inflation, supply chain challenges, and policy uncertainty could throw up additional roadblocks in the months ahead, but we continue to assess the longer-term outlook as constructive. We retain an overweight to equities and have modestly reduced portfolio risk by trimming our overweight allocations to commodities and high-yield municipal bonds in favor of an above-benchmark tactical cash position. Effectively, we are sticking with our optimistic expectations for post-pandemic growth and earnings while at the same time hedging against the asset price disruption that higher inflation could bring to both stocks and bonds.

Economic whiplash

The economy threw on the brakes in the third quarter, thanks to the Delta variant of COVID-19. Gross domestic product (GDP) clocked in at just 2.0% quarter-over-quarter on a seasonally adjusted basis, compared to 6.7% in the second quarter,¹ as personal consumption flatlined. New job creation disappointed despite record numbers of job openings. Growth in other parts of the world, including China, decelerated at a similar rate as mobility restrictions and plant shutdowns stymied economic activity.